On September 3, the hottest name in the U.S. stock market was not Nvidia, nor Tesla, but the one many people think of as a "retail stock trading app" — Robinhood (HOOD). It jumped about 15% in a single day, leading the S&P 500, with the stock price climbing above $123 and rebounding more than 20% from its mid-August low.
What makes it even more interesting is that this rally was not driven by retail traders going wild, but by Wall Street itself lighting the fuse.
The three major investment banks, one after another within three days, sounded the horn together.
On September 1, Morgan Stanley upgraded Robinhood to "Overweight" and raised its price target from $124 all the way to $150, reasoning that its growth engine is no longer just crypto and stock trading; retirement accounts, banking, credit cards, wealth management, prediction markets — the new businesses are so numerous it hardly looks like a brokerage firm.
Soon after, Scotiabank initiated coverage with a $136 price target, saying bluntly that the market has misjudged it; Piper Sandler also raised its target price to $145.
The three investment banks’ successive upgrades are essentially the same story: Wall Street is repricing Robinhood—from a "retail broker that lives on luck" to a "full-stack financial platform."
The real trump card: prediction markets
The core logic behind this rating upgrade is a business many people still haven’t fully grasped—prediction markets.
Put simply, it lets you bet on "future events": election outcomes, sports games, or even whether a company’s revenue next quarter will meet expectations. Q2 earnings show that Robinhood’s event contract revenue reached $156 million, already surpassing its stock and cryptocurrency trading revenue in the same period.
And this business currently covers only about 7% of users. In other words, the juiciest part of the cake hasn’t even been cut yet. Deutsche Bank analysts even expect that by 2028, enterprise KPI contract trading volume could exceed $1 trillion.
There’s another card to play: Robinhood Chain
Robinhood Chain, the in-house public blockchain launched on July 1, is also contributing a surprise: cumulative decentralized trading volume has exceeded $47 billion, total value locked on-chain has surpassed $1 billion, and daily active accounts have topped 18.7 million. Low-cost, high-margin on-chain fees are becoming a new revenue curve.
Q2 overall numbers were strong too: revenue of $1.31 billion and net profit of about $570 million—this company, once "all burn and no profit," has already entered a different era.
But don’t rush in just yet
Behind the excitement, three warning signs are worth noting:
First, the valuation isn’t cheap. The P/E ratio is around 45x and above, already pricing in a great deal of optimism. If growth comes in below expectations, the pullback will be painful.
Second, insiders are selling. Over the past three months, insiders bought $35.28 million and sold $67.13 million—the management’s attitude of voting with their feet is worth noting.
Third, regulation remains unresolved. The Ninth Circuit has already ruled that Nevada may treat sports prediction markets as unlicensed gambling, and the Supreme Court’s final decision will determine the ceiling for this growth curve. In addition, the gas fee subsidies for on-chain transactions expire in September, and whether trading volume can hold up after the subsidies taper off is also an open question.
In closing
Robinhood’s story is about an old truth: the market’s pricing of a company always follows the "narrative." When it was merely a "retail crypto trading tool," its valuation was crushed. When prediction markets and a public chain packaged it as the "next-generation financial infrastructure," capital rushed in again.
As for whether this cup is foam or champagne—on September 9, CEO Tenev will take the stage at the Goldman Sachs Technology Conference, and that could be the next key turning point.